Abstract
An old adage has it that ‘bad money drives out good’. Under the name of Gresham’s Law, this is well known to students of monetary theory and amply attested by historical experience. The precise conditions for it to rule have, however, to be borne in mind: ‘Where by legal enactment a government assigns the same nominal value to two or more forms of circulatory medium whose intrinsic values differ, payments will always, as far as possible, be made in that medium of which the cost of production is least, and the more valuable medium will tend to disappear from circulation’ (Harris, 1987, p. 563).
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© 1992 Confederation of European Economic Associations
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Streissler, E.W. (1992). Good Money Driving Out Bad: A Model of the Hayek Process in Action. In: Baltensperger, E., Sinn, HW. (eds) Exchange-Rate Regimes and Currency Unions. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-22039-7_10
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DOI: https://doi.org/10.1007/978-1-349-22039-7_10
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